Media Contacts:
Johanna Namir, 323-337-0022, jnamir@legalzoom.com, LegalZoom
Rossana Weitekamp, 516-792-1462, rossana@weitekamp.com
Barbara Pruitt, 816-932-1288, bpruitt@kauffman.org, Kauffman Foundation
Startup business owners expect lowered consumer demand in the next 12 months, but plan to increase employee hiring, quarterly survey shows
(KANSAS CITY, MO.) April 3, 2012 — Despite remaining generally confident about the prognosis for their own businesses, startup company owners sent mixed signals about their overall economic outlook for the next 12 months, according to the 2012 second quarter Kauffman/LegalZoom Startup Confidence Index released today by the Ewing Marion Kauffman Foundation and LegalZoom.
One-third of the respondents said they plan to hire additional staff in 2012 – a healthy 5 percent increase over the previous survey conducted in January – but the number of respondents who expect deteriorating consumer demand rose by 2 percent (from 25 percent to 27 percent). Those who believe the economy will improve or stay the same (63 percent) dropped by 3 percent, but the expectation that it will "improve significantly" climbed by 2 percent.
Eighty-two percent are confident or very confident that their businesses will be more profitable in the next 12 months than they are today, a minor 1 percent increase from the 81 percent confidence expressed in January’s survey.
The Kauffman Foundation sponsored the survey in conjunction with LegalZoom, the nation’s leading provider of online legal document services and legal plans to small businesses. The findings are based on 876 responses to a nationwide survey in March 2012 distributed via email to LegalZoom customers who formed their entities within the last 12 months. The Startup Confidence Index is conducted quarterly to gauge entrepreneurial confidence. The next survey will be conducted in July 2012.
"Although the survey involves self-responses and may not be scientific, it nonetheless has important implications", said Robert Litan, vice president of research and policy at the Kauffman Foundation.
"These mixed signals – particularly the decrease in the expectation of consumer demand – likely are attributable to escalating gas prices," Litan said. "It seems clear that entrepreneurs, who remain confident about their companies’ abilities to achieve profitability, are counting on themselves first and foremost to push the economy back to health."
The survey also showed a 6 percent drop of business owners operating out of a home office.
"This can be a sign of increased entrepreneurial confidence, the expansion of startups into larger, more established businesses and other factors that represent small business growth," said John Suh, CEO of LegalZoom.
In addition, the number of new business owners who applied for loans or lines of credit in the last year dropped from 20 percent in the first quarter survey to 16 percent in the most recent survey, potentially representing "a combination of trust and optimism that is leading entrepreneurs to invest more of their own money into the economy," Suh said.
The 2Q 2012 Findings:
